Following the traditional manufacturing industries such as steel pipes and tires, the risk of Sino-US trade disputes looming over the clean energy manufacturing industry has become a “sword of Damoclesâ€. Just like the exchange rate issue, the outbreak seems to be only a matter of time.
For US Trade Representative Ron Kirk, September 9 is not a pleasant day. In the early morning, he received a petition from the United Steelworkers requesting a countervailing investigation of China’s exports of renewable energy products to the United States.
The reason given by the trade union is that in the field of renewable energy, China has serious domestic production and export subsidies, which has made the interests of Chinese producers directly affect the clean energy security in the United States and the employment situation of laborers in the green industry.
This petition is not only because it is 5,800 pages long, but also because of the special status of the union. It is one of the largest trade unions in North America and integrates many industries such as mining, cement, and machinery. It has a membership of 1.2 million people and has unparalleled political power.
This union has repeatedly made its exports to China and repeatedly made gains. The most striking example is that on September 11 last year, the Obama administration imposed a punitive tariff on Chinese tires to the United States, which was prompted by its petition.
The time choice of this union is also quite profound. According to the “Section 301†of the U.S. Trade Law, Obama must make a ruling on this petition within 45 days and decide whether to carry out anti-subsidy investigations against China’s policies, and that day is October 24, only one week away from the U.S. midterm election. More time. Such a timeline will enable the trade union’s appeal to be maximised in the pre-selection political rally. This means that both the Communist Party and the Republican Party’s congressional candidates may put this issue related to China into the balance of the election strategy.
As a result, this anti-subsidy petition carries more political implications.
The grudges of the union
"Like a tightrope walk, the industry has long been worried that the United States will bring a countervailing investigation to us." A person in charge of China's optoelectronics company, who declined to be named, told reporters.
According to the petition of the American Iron and Steel Workers’ Association, China’s clean energy manufacturing companies receive a large amount of government subsidies, which are mainly reflected in the low land prices and low interest rates of banks**. Because of the policy support from various provinces, more and more clean energy projects have been launched, and manufacturing costs have been greatly reduced.
However, China, which is a big producer of clean energy, has not yet become a big consumer of it. Therefore, a large number of products are actually exported to European and American markets. According to the latest data from the US Department of Commerce, in 2008, 23% of PV modules produced in China were exported to the United States.
In the United States, although both the federal and state levels are strongly advocating clean energy, the industrial stimulus policies used by the two are quite different. The state government's subsidy for clean energy is more directly input into the consumer sector or government projects, but less into the production sector.
Taking California as an example, following the "Silicon Valley", from Governor Schwarzenegger to the state legislature and related functional departments, they are all working hard to make the state "Optical Valley." The California Energy Commission and the California Public Utility Commission have launched a massive program to install 3,000 megawatts of photovoltaic power generation equipment for homes and businesses in the state by the end of 2016. In the implementation of the "Optical Valley" plan, California consumers can receive government subsidies such as discounts, tax credits, and installation services. The California government also passed legislation, from 2007 to 2016, plans to invest a total of 3.351 billion U.S. dollars in optoelectronics.
This is also true for Texas, which is traditionally considered to be primarily dependent on oil and gas. In the U.S. states, its wind power is twice as high as that of Iowa, which is ranked second, and it is more than other U.S. states, Germany, Spain, China, and India outside of Texas. The Texas government has spent huge sums to subsidize the efficiency of wind power transportation. In 2008, through a $5 billion financial plan, the state built a network of 3,700 kilometers.
Against these backgrounds, China’s clean energy products are considered to “steal†the U.S. policy benefits.
According to a survey by Bloomberg New Energy Finance, the number of imported PV modules from China increased significantly after 2008; at the end of 2009, only half of California's optoelectronics market was seized by Chinese products. At the same time, the U.S. Steel Workers Federation also believes that due to China's massive expansion of production capacity, the price of PV modules has fallen by nearly half in the past two years, while the average price of Chinese wind turbines is also significantly lower than the US$685,000 per megawatt. The sale price of US$850,000 for European and American fans made the latter lose its market competitiveness. According to his petition, the China Development Bank provided 23 billion yuan in policy performance to three photovoltaic panel makers and one wind turbine producer.
The union also stated that the Chinese government has adopted various export control measures for rare earths necessary for production of solar panels, wind turbines, high-efficiency batteries, and high-efficiency lighting equipment, which has reduced the export quota of rare earth elements by half in 2010. This has pushed up international prices and caused a serious shortage of raw materials for production by foreign companies.
Cork's puzzle
Following the traditional manufacturing industries such as steel pipes and tires, the risk of Sino-US trade disputes looming over the clean energy manufacturing industry has become a “sword of Damoclesâ€. Just like the exchange rate issue, the outbreak seems to be only a matter of time. The periodic elections in the United States may become the incident node.
The U.S. Steel Workers’ Federation will organize various actions to protect the work and salaries of its members. For example, it had conducted an 11-month-old mega-competition against Vale's nickel business in Ontario, Canada, and the company’s performance has been hit hard.
The members of the union are often mature and active political voters. In the mid-term elections, their votes can directly affect the success or failure of candidate members. Unions also often come up with large sums of money to fund election campaigns. In the 2008 election, it was a political ally of the Party and helped them win several important manufacturing states in the primary and general elections.
The mid-term elections are approaching. As a member of the Obama administration, Cork has not dared to take this matter seriously in the face of the Steel Workers’ Federation, which plays a pivotal role in American politics. What's more, policy-oriented tilting toward the clean energy sector is one of the national policies that the Obama administration has relied on.
However, as a representative of the U.S. trade, Koch also suffered from headaches in China. Because the US Department of Commerce just ruled on September 21 that there were dumping and subsidy behaviors for Chinese coated paper, it would impose anti-dumping duties of 7.6% to 135.83% and countervailing duties of 17.64% to 178.03%. At the same time, both the US Treasury Secretary Timothy Geithner before the Capitol Hill hearing and the President Obama of the US Financial Television CNBC lens all stated that the currency value was underestimated and continued to pressure China on exchange rate issues.
The problem has become extraordinarily complicated. On the one hand, the Obama administration must consider the relations with China and on the other hand must respond to the demands of the trade unions. This made it even harder for Cork to make a purely technical decision on the request of the Steel Workers' Federation. If, at this time, he decides that there is a subsidy for China's clean energy products exported to the United States and takes corresponding measures, Cork has reason to worry that China will launch a new round of trade retaliation.
Affected investment
After all, Cork is a member of Obama’s political team and his actions must be coordinated with other trade policies toward China. As the relevant policy has not yet become clear, in an interview with reporters, the U.S. Trade Representative’s petition against the Iron and Steel Workers’ Federation was only made by its spokesperson, Nefeterius McPherson, “will be based on Article 301 for 45 days. "Response within" promise.
The controversy over clean energy trade, like the exchange rate, ties together the interests of many U.S. agencies, because this area does not only have trade relations between the two countries, but also affects bilateral investment relations.
One example is Unisola's new solar laminate production base in Tianjin. It is a joint venture jointly established by U.S. Solar Energy and Tianjin Jinneng Investment Co., Ltd. Every day, a large number of solar panels manufactured in Michigan are shipped to China, and then assembled by Chinese workers and carried out in China. Sales.
In Texas, USA, a 6-million-acre 600 MW wind farm is jointly owned by Shenyang Power Group in China, Cielo Wind Power in the United States, and a venture capital investment company in the United States for renewable energy. create. Although 240 2.5-megawatt wind turbines were imported from China and benefited from the federal government's economic stimulus plan, most of the project's funds came from Chinese banks.
A Washington economic policy circle who asked not to be named told reporters that the Chinese and U.S. governments are negotiating bilateral investment agreements aimed at breaking investment barriers. Washington hopes to achieve a framework result within two years.
Considering that China's current restrictions on foreign investment are increasing, anti-subsidy and anti-dumping cases that are frequently made in the financial and core industrial fields and trade areas may become bargaining chips for the Obama administration.